Merger & Acquisition Process Should Complete Within 15-60 Days
The MCA has a new rule for M&A deals. Businesses & companies will have to complete their merger or acquisition processes within a set deadline of 15-60 days.
The Ministry of Corporate Affairs (MCA) in India has introduced new rules that aim to expedite the approval process for mergers and acquisitions (M&As).
The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023, which came into effect on May 15, outline the changes.
Under the new rules, M&As can now secure approval within a timeframe ranging from 15 to 60 days.
If no objections or suggestions are received from the Registrar of Companies (RoC) and the official liquidator within 30 days of receiving the scheme, the Centre (government) can issue a confirmation order within 15 days.
This is contingent on the scheme being deemed in the public interest or beneficial to creditors.
However, if objections or suggestions are raised by the RoC and official liquidator, the Centre can still issue a confirmation order within 60 days if these objections are found to be unsustainable and the scheme is considered to be in the public interest.
In cases where the merger or amalgamation is deemed not to be in the public interest, the Centre has the option to file an application for review before the tribunal.
It’s worth noting that if the government fails to issue a confirmation order or file an application within 60 days, the merger or amalgamation scheme will be deemed approved.
These new rules have significant implications, particularly for the startup ecosystem. With the ongoing macroeconomic challenges, startups are increasingly looking towards M&A deals to navigate funding constraints and sustain their operations.
The streamlined approval process for M&As will provide startups with a quicker route to secure necessary approvals, facilitating consolidation and survival in a challenging environment.
In 2022, there was a notable increase in M&A activity, with a total of 240 deals, representing a 10% rise compared to 2021. The enterprisetech sector witnessed the highest level of M&A activity during that period.
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The introduction of the new rules to complete the merger and acquisition process within 15-60 days aims to expedite the approval process, enhance efficiency, and support the growth and consolidation of businesses in India.
